Forget "Retrograde Institution" OPEC, Says Analyst, Nigeria Can Bring About Oil Market Rebalance

Helima Croft says troubles in Nigeria alone have reduced OPEC's daily output by 800,000 barrels.

Another day, another argument that the Organization of the Petroleum Exporting Countries (OPEC) has been rendered irrelevant, this time from Helima Croft, head of commodities strategy at RBC Capital Markets, who says forces greater than the cartel will bring about a market rebalance.

Pointing out to CNBC that troubles in Nigeria alone have reduced OPEC's daily output by 800,000 barrels, Croft said the cartel "doesn't have to do anything ... Nigeria can balance this market: when Nigeria goes offline, they go offline for a long time."

Croft added that she will be keeping tabs on the June 2 Vienna summit, not for any policies that members may propose, but for what it looks like "when they walk out of that meeting: how deep are the divisions? Is OPEC over for now because Saudi Arabia doesn't care? Is Saudi Arabia over OPEC?"

The strategist echoed the sentiments of other observers when she went on to say, in reference to Mohammed Bin Salman, deputy crown prince of Saudi Arabia, "Does [he] see any benefit or does he see it as a dinosaur? Does he have a different generational view of OPEC?

"He's a young man: he may think this is a retrograde institution."

Francisco Blanch, head of global commodities and derivatives research at Bank of America/Merrill Lynch, thinks the Saudis if anything in Vienna "may try to talk the market down ... because I still think that we're only starting to see a wave of bankruptcies coming through."

Blanch believes that despite OPEC condoning the free-for-all attitude that has characterized member oil output of late, "The cracks are happening ... whether it's Venezuela or other countries: the pressures are going to build.

"We're seeing a lot of countries that are just not delivering what we thought they were going to deliver; that could get worse."

Like Croft, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA, last week said he will scrutinize new Saudi energy minister Khalid al-Falih's stance at the Vienna summit, explaining that the recent change in Saudi leadership – and the plans for further production capacity and market share that go along with it - means the meeting will still be "pivotal for the cartel and its future."